Wales: A Small Clever Country

While we wait for the long-awaited Welsh Calman-style Commission to begin, there have been two crucial reports in the past fortnight alone about the Welsh economy and our capacity to move forward over the coming years.

The former illustrates the failures of successive London-based governments to deal with the employment problems of the south Wales Valleys in particular, where economic inactivity in some local authorities is as high as one in four. It also suggests that current UK Government's work and welfare proposals will do little to improve the situation.

Plaid Cymru's Work and Pensions spokesperson, Hywel Williams MP, has long pointed out that, in the absence of potential employment, shuffling men and women from incapacity benefits over to job-search benefits will do no good. It's hard to believe the purpose of it either, as it is surely more about getting people off benefits rather than providing them with support back into work.

Unfortunately this leaves us with a massive cop-out - a job creation programme which can come about only with Westminster government support, and no suggestions on what or how to implement this - or the type of employment that can be sustainable across the Valleys. In effect, given the current devolution settlement, we are back in the hands of the Westminster Government that have failed us so badly for so long.

Adam Price's Flotilla Effect appears at first to be less relevant and more esoteric - an article which juxtaposes small and large countries in the European Union and analyses their historic growth patterns, their responses to the economic crisis and some thoughts for the future.He debunks a series of myths in the report, arguing that while smaller countries do find themselves more vulnerable during the bad times, the flotilla of small countries rise faster with the tide of economic success than their larger counterparts.

Smaller countries recognise their limitations. They do not have a significant domestic market and so must gear themselves to the export market where they often specialise in a handful of sectors where they hold a competitive advantage.

This was the thinking behind Ieuan Wyn Jones' Economic Renewal Plan published last year when he was the Minister for Economy and the Transport.

Quite simply, Wales cannot be good at everything, but we can be the best at some things.

Where Price's work comes into its own, though, is the stark contrast between those small countries which went for independence and those which did not. This is illustrated first of all by a comparison between the similar steel-based economies of the Saarland in Germany and next-door Luxembourg. Where an independent Luxembourg has powered ahead since the Second World War, the Saarland region has become the poorest of the former West German Lander since voting against independence in a 1955 referendum.

Price then compares economic growth in Wales, a paltry average of 0.9% since 1989, with the average growth of small countries across the EU since that time. Even taking the Eastern bloc's 'catch up' with Western economies into account, the findings are stunning. Instead of being the poorest part of the UK in terms of GVA, Wales would be above the UK average.

While the Republic of Ireland, Iceland and others are facing stiff retrenchment at the moment, let's not forget that their standard of living, levels of employment and happiness have all increased substantially in recent decades whereas the UK has fallen in most international indicators.

Why should Wales have been any different? Or be any different in future?

Structurally there are, of course, potential problems with economic independence. While a smaller decision chain allows for quicker and more nimble movement, it could also lead to a situation of nepotism, cronyism and a lack of qualified personnel - but these can be avoided through the introduction of proper chains of command and scrutiny.

Plaid has put forward ideas such as the "Greenprint for the Valleys" and, of course, last year's Economic Renewal Plan to develop the economy of the Valleys and beyond.

The UK Government must re-think their plans for work and welfare reform. At the same time, the Welsh Government must start to think and act pro-actively, rather than simply cast blame towards London. A forward-thinking Welsh economy specialising in specific research and development and new technologies must be the way forward.

We are fond of talking about Wales as a clever, small country - let's live up to the promises we make our people.